Charles Roxburgh (Second Permanent Secretary at HM Treasury)

Treasury Committee Oral evidence: Work of HM Treasury, HC 969 Wednesday 11 November 2020 Ordered by the House of Commons to be published on 11 November 2020. Watch the meeting Members present: Mel Stride (Chair); Rushanara Ali; Mr Steve Baker; Harriett Baldwin; Anthony Browne; Felicity Buchan; Ms Angela Eagle; Julie Marson; Siobhain McDonagh; Alison Thewliss. Questions 1 - 114 Witnesses I: Sir Tom Scholar, Permanent Secretary, HM Treasury; Clare Lombardelli, Director General, Chief Economic Adviser, HM Treasury; Charles Roxburgh, Second Permanent Secretary, HM Treasury; Anna Caffyn, Director for Finance, HM Treasury. Examination of Witnesses Witnesses: Sir Tom Scholar, Clare Lombardelli, Charles Roxburgh and Anna Caffyn. Q1 Chair: Good afternoon and welcome to the Treasury Select Committee evidence session on the work of HM Treasury. We are very pleased to be joined by four panellists from the Treasury this afternoon. I wonder if each of you could just very briefly introduce yourself for the public record. Sir Tom Scholar: Good afternoon. I am Tom Scholar, Permanent Secretary to the Treasury. Charles Roxburgh: I am Charles Roxburgh, Second Permanent Secretary at the Treasury. Clare Lombardelli: I am Clare Lombardelli, chief economic adviser here at the Treasury. Anna Caffyn: I am Anna Caffyn. I am the finance director at the Treasury. Q2 Chair: Welcome to all. Questions will be specifically directed at particular members of the panel. However, if you are not asked to comment and you particularly want to, please do not hesitate to raise your hand and I will endeavour to bring you in at that point. Could I start with Clare? You will probably be familiar with the minutes of the SAGE meeting on 21 September. In those minutes, it states, “Policy makers will need to consider analysis of economic impacts and the associated harms alongside this epidemiological assessment. This work is under way under the auspices of the chief economist.” Can I first ask you to confirm that you are the chief economist, as referred to in those minutes, just in case we have the wrong person before us? Clare Lombardelli: I believe I am, yes. Q3 Chair: That is a very good start. In that case, could you tell us a bit about the work that you have been undertaking? In the minutes, it refers to the interventions that it is focusing on, including, for example, a circuit breaker—a short period of lockdown—working from home, banning all contact within the home with members of other households, the closure of bars, restaurants, cafes, indoor gyms and personal services, and all university and college teaching to be online unless face-to-face teaching is absolutely essential. Could you tell us about that the work that the minutes refer to, and specifically in the context of the way the minutes frame the issues? Clare Lombardelli: Yes, certainly. Let me tell you a bit about the work that we do at the Treasury on an ongoing basis. As part of policymaking and policy design, the Treasury continues to provide economic analysis to Ministers as part of that, considering a whole range of factors. What we have not looked at specifically, as the Chancellor set out last week, is a specific prediction or forecast around specific restrictions. What we instead do is iterative economic analysis of policy that the Government are considering. We consider a whole range of data and analysis as part of that. A lot of that is in the public domain, as you would expect. We look at, for example, what has happened to the economy over the recent period. We look at things like gross value add and the size and contribution that different sectors or regions of the country make to the economy. We look at things like the numbers of people who are employed in different sectors. We look at things like the pay in those sectors. We look at the number of businesses and the size of those businesses. All of this is to build a general picture of what is going on in the economy, which we then use as part of our analysis. We supplement that with a whole range of information that other external sources provide. As you know, the Government’s forecasting is done by the Office for Budget Responsibility. They provided a lot of analysis through this crisis. The Bank of England also do a macroeconomic forecast for the economy four times a year, and we look in detail at that. We will also look at what other independent bodies have put out there in terms of analysis. We bring all of this together as part of our policy advice to Ministers across a whole range of issues, so that they have the latest view and position on the economy. Q4 Chair: I am very aware that there are all these different strands to the kind of work that you are doing and, of course, all the external stuff that the OBR, the MPC, the FPC and others also produce, but my question is a very specific one, so I need to bring you back to these minutes. The minutes say, “Policy makers will need to consider analysis of economic impacts and the associated harms alongside this epidemiological assessment. This work is under way under the auspices of the chief economist.” Very specifically, Clare, on that work on the economic impacts and associated harms of those proposed interventions, can you tell us about that? Clare Lombardelli: Like I said, as the Chancellor set out in Parliament last week, we have not done a specific prediction or forecast of the restrictions. What we do is ongoing policy that feeds into decisions that Ministers take, which they consider alongside the health impacts, the social impacts and the economic impacts. Q5 Chair: From what you are saying, it sounds like the SAGE minutes might need correcting, because they suggest that there is measure-specific work that has been undertaken by yourself and the Treasury, which one would reasonably expect to guide the very big decisions that Ministers, the Chancellor and, indeed, the Cabinet then have to take. Is it the case that the minutes here are just not describing the work that has been undertaken? Clare Lombardelli: What the minutes are pointing to is the ongoing analysis that we undertake here at the Treasury across a whole range of economic factors and a whole range of policy options, as I say. Ministers consider all of that, and they consider these different factors—health, economic and social—in coming to their decisions. Q6 Chair: I have to press you on this because it is really important. The Chancellor and I have had exchanges on this information, and his answer was broadly in line with yours in terms of pointing me to the OBR and others. These minutes very particularly say that there will be a “need to consider analysis of economic impacts and the associated harms.” The references there are to the interventions that the minutes identify, and those are the ones that I read out earlier around schools, cafes and gyms closing, and so on. It is very specifically saying that there is ongoing work—or was at the time of 21 September—that you were undertaking in analysing the economic impacts and associated harms of those potential measures, is it not? Clare Lombardelli: It is referring to the more general analysis that we undertake all the time in Government on the impacts. Ministers will have considered all of those impacts in coming to the decisions that they have taken. Q7 Chair: It clearly does not because, if you look at the minutes, under section 2, it says, “A package of interventions will need to be adopted to reverse this exponential rise in cases.” It then lists, (a) through to (e), the circuit breaker and the various other elements that I just referred to—the closure of all bars, et cetera. Then, further down, it has this statement that work “will need to consider the analysis of the economic impacts and the associated harms”, and the reference is clearly to those proposed interventions, and yet your response is, “No, I think they are referring to something more general than that.” Clare Lombardelli: I can refer you back to what the Chancellor said in the House last week. You and he have exchanged on this a number of times, including in the House, where he said there are not specific predictions or forecasts of these measures. Q8 Chair: That would clearly indicate that the SAGE minutes are inaccurate, because the SAGE minutes have said that there has been work carried out, under your auspices, on exactly that. Clare Lombardelli: Work goes on as part of Government analysis. As part of policymaking, work goes on in which we analyse the economy, and that would cover some of these issues. All I can say, as the Chancellor said, is that we do not have specific predictions or forecasts of these impacts. Ministers will have considered the economic, health and social impacts in coming to the decisions that they took. Q9 Chair: Has any of the work that SAGE suggests has been going on— specific work around analysing the economic impacts of these measures— actually taken place within the Treasury or under your auspices? Clare Lombardelli: What we do here is we look at what is going on in the economy, including the impact of previous measures that have been taken. Q10 Chair: I am sorry to interrupt, but I have a very specific question, which you could answer with a yes or no, really. Has any of this work, as described by SAGE, on the economic impacts of these particular interventions, as they suggest, been carried out under your auspices at the Treasury, or are the minutes wrong? Clare Lombardelli: As the Chancellor said last week, a specific forecast or a specific prediction of the impacts does not exist.

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